Probes To Go On Despite Suicide

July 25, 1985|By John G. Edwards, Business Writer

The bankruptcy trusteee for ESM Government Securities Inc. and an attorney for Ohio said the suicide of a lawyer who became entangled in investigations of the securities firm will not affect lawsuits stemming from ESM.

Stephen Arky, 42, a prominent Miami attorney who represented ESM and invested in securities deals with ESM, shot himself in the head at his Coral Gables home Monday. Friends said he was despondent, because he felt he was being unfairly linked to the failure of ESM, which owes creditors $300 million.

Some of those who have criticized Arky expressed shock at his death but said his death would not affect their legal actions.

``At this point, it`s inappropriate to say anything other than how sorry we feel for his family,`` said Richard Critchlow, an attorney and associate of bankruptcy trustee Thomas Tew.

``It`s not going to change anything,`` he said. ``We`re going to keep doing what we`re doing.``

Tew is trying to recover ESM assets so they may be distributed among creditors, including cities, counties and financial institutions across the nation.

Tew has indicated he would try to reclaim payments made to ``insiders`` who closed out securities deals shortly before ESM`s insolvency was public knowledge. He includes Arky on his list of insiders.

Arky unwound a securities deal and received $35,000 from ESM in January, according to Eugene Stearns, one of his law partners.

ESM failed in March. In a suicide note, Arky said he was not aware of ESM`s insolvency until it was closed down.

Later in March, Home State Savings Bank of Cincinnati collapsed amid alarm over Home State`s securities transactions with ESM. The state of Ohio has spent about $140 million so far to compensate Home State depositors for the thrift`s losses to ESM, said John Hartranft, a private attorney representing Ohio.

Despite Arky`s death, Hartranft said Ohio will continue to pursue a $432 million lawsuit in which Arky is a defendant. The state will substitute the Arky estate for Arky as a defendant, he said.

``The fact that Mr. Arky is not with us shouldn`t affect what we do to protect our client,`` he said.

Other defendants in the lawsuit include Marvin Warner, the former owner of Home State and Arky`s father-in-law, and other officers and directors of Home State.

A spokesman for the Securities and Exchange Commission, which accused ESM of fraud and shut down the firm, declined to comment on how Arky`s death might affect its investigations.